Letter - ‘Airfreight not an expensive option’

I read with interest and concern the comments from the freight forwarding community in the FTW of July 2 (Airfreight volumes shrink as shippers battle rising costs). In almost any publication lately the export community is continually complaining about the strength of the rand which has negatively impacted their bottom lines and increased competition from other countries. Invariably, in order to remain competitive they need to reduce costs, and one of the first items investigated is in the supply chain, especially as this is generally a third party operation and easier to pressure. What is surprising is the fact that although the majority of airlines have been forced to increase their fuel surcharges due to the escalating oil prices, because of the reduction in airfreight, some carriers are offering discounted rates in order to fill the aircraft. Others have implemented higher breakpoints - in some cases at +10 000-kilograms - in order to stimulate the airfreight market and compete more effectively, especially within the regions most affected by road and sea transport. Uganda, Tanzania, Kenya and Zambia are primary examples. Yet often these “discounts” are not being advertised - or for that matter passed onto the shippers. Another factor that has seriously affected our market share is the fact that the majority of airlines convert their rates to US dollars invoiced at the IATA monthly 5-day rate of exchange. In 2001 when our rand depreciated to almost R14/US$ a freight forwarder marked up the airfreight rate by 10% - which is conservative. He is now marking the rate up by over 20% in order to generate the same revenue. This has effectively increased the real cost, on the basis that 80% of world trade is conducted in US$, to the shipper. Consequently road and seafreight are growing - and not necessarily to the benefit of the shipper who carries the additional financial burden due to the lengthier delivery period - and for that matter the efficiency of accessing these markets. The motor industry in SA has established itself as a primary user of airfreight capacity and not purely for “emergency” purposes but as an integral part of its supply chain. It has achieved this by committing to large volumes and - in partnership with the airlines and freight forwarders - sourcing the best rates and alternatives. It goes without saying that all parties benefit from these arrangements - the volume of airfreight speaks for itself. The airfreight community needs to actively change the SA exporters’ mindset that carriage by air is an expensive option. Max Mariotti, Aviation GSA, Johannesburg.